Prof Chuck Holmes, The Common Sense Economist

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The State of the Union According to the Common Sense Economist

The State of the Union is not good. Freedom, the well-being, and prosperity of the American people are in danger.
The greatest threat to the economy of the nation is the amount Americans owe. The national debt of the federal government is now $17.4 trillion, and 57 percent of it is held by foreign countries, some not so friendly to us. We owe $1.3 trillion to China, which is not one of our best friends, and $1.2 trillion to Japan. Private citizens, the government, or the Federal Reserve hold the rest. But the national debt is only part of the problem. States owe $1.16 trillion. Local debt stands at $1.8 trillion. We must consider what we American citizens owe. We owe for our mortgages, cars, and consumer finance a whopping $16.4 trillion. Then come our unfunded liabilities: Social Security–$16.8 trillion; Prescription Drugs–$22.3 trillion; Medicare–$88.6 trillion. Add it all up, we Americans have a total debt of $164 trillion. That’s $517,350 per person. Worse yet, it is $1,423,611 per taxpayer, those who will eventually bear the burden. These debts must be paid. How?
The employment of American labor is a continuing problem. The labor participation rate of Americans eligible for the labor force is a miserable 62.8%, down from 64.6% in 2009. The population of Americans 16 years and older, those eligible for the labor force, increased by 9.9 million from 2009 to 2013. The labor force increased by only 4.4 million. The participation rate of the 9.9 million increase in population was only 44%. The other 54% decided not to look for work and perhaps become dependents on the government supported by working taxpayers. Some economists were ecstatic over the December unemployment rate of 6.7%. This is approaching the so-called natural rate of unemployment, but it does not include part-time workers or those who have given up and left the labor force. The “real” unemployment rate is over 13%. The Wall Street Journal reports today that one of six men 25 to 52 years of age, the “prime working age,” are unemployed–a rate of 16.7% for that age group.
Poverty continues to be a problem in the United States. The poverty rate in the United States was 16%, and 35 million people were in poverty, in 1965 when President Johnson declared the war on poverty. That war has since cost taxpayers over $20 trillion. Today the poverty rate is 15% and 46.5 million people are in poverty. Why? One reason is lack of education. More important is the disintegration of the American family. One in four children in the United States is being raised in a single-parent family. In the African-American community, 72% of black children are being raised in a single-parent household. The poverty rate of children in single- parent families is approximately 60%. The poverty rate of children in two-parent families is only 11%. Americans are not working as they should. The worker participation rate is the lowest it has been since 1977. The best way out of poverty is a job.
Americans no longer trust their governments. The internal Revenue Service, probably the most hated of government “services,” is unfairly, and perhaps illegally, attacking those who disagree with the policies of the current administration. The administration ignored cries for help from embassy officials in Libya, a decision that resulted in the deaths of our ambassador and three others personnel. The President and Secretary of State then blamed the attack on an unplanned attack by Muslims angered by a movie on the Internet. Members of this unplanned attack just happened to have rocket-propelled grenades, hand grenades, assault rifles, anti-aircraft machine guns, artillery, and mortars in their back pockets. Administration officials denied the attack was terrorism. All thinking Americans knew better. Still, the President calls the murder of the ambassador and others a “phony scandal.” The Secretary of State said, “What difference does it make?” Then she disappeared. The President went on a fund-raising campaign. The Attorney General has attacked journalists who did not support the administration, charging them with crimes, in violations of the First Amendment. Promises that the President knew were untrue were made about the Affordable Care Act. Wars have been fought since World War II, the last war we fought to win, in Korea, Vietnam and in the Middle East in which winning was not a strategy. No American should die in a war in which winning is not important.
President Calvin Coolidge made a great statement about the business of America. He said, “The business of America is business.” The business of America today is anti-business. The current administration has attacked oil companies, coal companies, financial companies, banks, Wall Street, and anyone who makes money. The 99 percent are pitted against the one percent. CEOs are reluctant to invest because they believe the CEO of the United States is out to get them. President Obama threatened to kill the coal industry. Newly hired workers at Darden Restaurants are mostly part-timers. I have had changes of servers during a meal because the first servers’ time was up. The CBO has increased expected job losses because of the ACA from the initial 800,000 to 2.3 million. The ACA is now defacto Obamacare because the president has made the ACA what he wants it to be.
President Obama promised cradle-to-grave care in “The Life of Julia.” Many are so excited that we have become a nation of dependency. The 47% described by Mitt Romney in his presidential campaign would rather depend on government than work. But government has no money, other than that it takes from those who work. The only way that government can provide equality is to make everyone poor. Then, only leaders in government will be rich.
The solution to all of our problems is economic growth. Current government policies are anti-growth. It was Ronald Reagan who said, “Government is not the solution to our problem. Government is the problem.” Our nation became great as a capitalist nation. Government should get out the way of business and let business thrive.